Nordic American Offshore (NYSE: NAO) and Matson (NYSE:MATX) are both small-cap transportation companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, risk, dividends, valuation and earnings.

Volatility and Risk

Nordic American Offshore has a beta of -0.22, indicating that its stock price is 122% less volatile than the S&P 500. Comparatively, Matson has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500.

Profitability

This table compares Nordic American Offshore and Matson’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nordic American Offshore -230.37% -14.04% -8.96%
Matson 3.54% 15.16% 3.55%

Dividends

Nordic American Offshore pays an annual dividend of $0.08 per share and has a dividend yield of 7.0%. Matson pays an annual dividend of $0.76 per share and has a dividend yield of 2.5%. Nordic American Offshore pays out -5.3% of its earnings in the form of a dividend. Matson pays out 47.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Nordic American Offshore has increased its dividend for 4 consecutive years. Nordic American Offshore is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Nordic American Offshore and Matson, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nordic American Offshore 0 0 0 0 N/A
Matson 0 2 1 0 2.33

Matson has a consensus target price of $39.00, indicating a potential upside of 28.88%. Given Matson’s higher probable upside, analysts plainly believe Matson is more favorable than Nordic American Offshore.

Institutional and Insider Ownership

30.4% of Nordic American Offshore shares are owned by institutional investors. Comparatively, 84.7% of Matson shares are owned by institutional investors. 2.6% of Matson shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Nordic American Offshore and Matson’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nordic American Offshore $16.35 million 4.27 -$13.50 million ($1.51) -0.76
Matson $1.96 billion 0.67 $218.50 million $1.59 19.03

Matson has higher revenue and earnings than Nordic American Offshore. Nordic American Offshore is trading at a lower price-to-earnings ratio than Matson, indicating that it is currently the more affordable of the two stocks.

Summary

Matson beats Nordic American Offshore on 11 of the 15 factors compared between the two stocks.

About Nordic American Offshore

Nordic American Offshore Limited (NAO) operates platform supply vessels (PSV). The Company owns approximately eight vessels. The Company operates in the offshore support vessel market segment. The Company has approximately two vessels under construction. The Company’s vessels operate in the North Sea in both the term and spot market. The Company’s vessels include NAO Fighter, NAO Prosper, NAO Power, NAO Thunder, NAO Guardian, NAO Protector, NAO Storm and NAO Viking. Each of the Company’s vessels has a capacity of approximately 4,200 deadweight tonnage (DWT) and a cargo deck area of approximately 850 square meters. The Company’s vessels under construction include NAO Galaxy and NAO Horizon. Remoy Shipping AS and V. Ships Limited provide technical management for the Company’s vessels.

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